Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

13. Statement of Cash Flows

Introduction to the Statement of Cash Flows

Financial Accounting

13. Statement of Cash Flows

Introduction to the Statement of Cash Flows

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Multiple Choice

Which of the following statements regarding the statement of cash flows is FALSE?

Cash flows from operating activities include cash received from customers and cash paid to suppliers.

The statement of cash flows reports cash inflows and outflows from operating, investing, and financing activities.

The statement of cash flows is prepared using only the accrual basis of accounting.

Investing activities generally include the purchase and sale of long-term assets.

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Verified step by step guidance

Step 1: Understand the purpose of the statement of cash flows. It is a financial statement that provides information about cash inflows and outflows categorized into operating, investing, and financing activities.

Step 2: Review the definition of operating activities. These include cash transactions related to the core operations of the business, such as cash received from customers and cash paid to suppliers.

Step 3: Examine the definition of investing activities. These generally involve the purchase and sale of long-term assets, such as property, plant, and equipment, or investments.

Step 4: Analyze the statement regarding the accrual basis of accounting. The statement of cash flows is prepared using the cash basis of accounting, not the accrual basis, as it focuses on actual cash movements rather than accrued revenues or expenses.

Step 5: Identify the false statement. Based on the analysis, the statement 'The statement of cash flows is prepared using only the accrual basis of accounting' is false because the statement of cash flows uses the cash basis of accounting.